Fixed Rates Can Mean Lower Payments - While the common wisdom for the past few years has been that
30 year fixed rate mortgage are more expensive and rigid than their ARM Adjustable rate counterparts, refinancing into a
30 year fixed rate mortgage doesnt always mean moving to higher payments or sacrificing flexibility. Fixed Rate mortgages have come a long way, and in many cases present an excellent option for borrowers who are in ARM mortgages to lock in a fixed rate before the payment on their ARM adjusts and skyrockets. Fixed Rate mortgages are even available as a viable option for borrowers who prefer the flexibility and minimum payment options of Option ARM mortgages, but need to refinance into the security and predictability of a fixed rate.
Fixed Rates can mean lower payments when compared to an ARM loan about to adjust in the near future. While, the fixed rate may have higher payments in the short term when compared to an subprime ARMs. However, when these ARM Loans adjust the payment is likely to be higher and may continue to grow until ceiling is reached.
Most consumers like fixed rate mortgages simply because of the security factor in having one. The customer feels safe about the mortgage transaction, knowing that their mortgage payment and interest rate will never change on them (unless of course taxes and insurance are included into the mortgage payment and those happen to increase). While there are often times many good reasons to go ahead and finance your mortgage on an ARM loan, more times than not most consumers opt for a fixed rate and a fixed payment.
The spread, or rate difference, between short term adjustable rates and fixed rates has decreased drastically in recent times. Many of the options previously only offered through adjustable rate mortgages, such as interest-only options and pay-options, are currently offered on fixed rate loans as well.
Even though refinancing into a fixed rate mortgage may mean slightly higher payments then a lower rate ARM you have to think logically. If you let your ARM begin to adjust the increase in payments will eventually make the ARM more expensive then the fixed.
Fixed Rate Mortgages are good for those who plan on holding the Subject Property for a long period.
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Shopping for mortgage rates when you are considering refinancing may be a good idea. However, shopping for an honest and knowledgeable mortgage professional may prove to be more valuable. Some loan officers may quote you a low rate without telling you about the number of points or high fees necessary to get that rate. Additionally, you may be quoted a rate that the loan officer never intends on delivering. If you utilize the services of an honest professional, you can be sure you will receive a competitive rate and fee structure that is in your best interest.
When refinancing, be sure to google your mortgage professional's name. This may give you an idea of who is more invested in the community and who is going to give you the service you deserve.
If you have an adjustable rate mortgage (ARM), you should definitely start looking into refinancing at least a few months before it is scheduled to adjust. Mortgage rates refinancing can potentially save you hundreds of dollars a month.
One question to ask yourself is: What are my goals and needs for a refinance? Sometimes a loan with the lowest rate may not be the best fit for you, but rather a program that serves your actual needs.
When you are considering refinancing there is more to consider than what the best mortgage rates are. Many companies can quote you the best rates available on an initial phone call and that does not in any way mean that will be the rate you will receive on your mortgage. There are many factors that go into determining a mortgage rate and there are many rate increases and decreases for items such as loan size, income documentation types, etc... Therefore, just because one company quotes you the lowest rate does not mean that they are going to provide you with the lowest rate. Your whole credit package has to be taken into consideration to determine your exact rate.
Mortgage refinancing rates are based off of three main things, your credit score, your equity borrowed and the mortgage loan program you choose to borrow with. If you choose a stated income fixed rate mortgage your interest rate will be much higher then the borrower who chooses a full documentation 30 year fixed rate mortgage.
Mortgage rates refinancing should be thought over carefully. A lower interest rate may not always save you money in the long run. All the costs associated with refinancing must be taken into account. The type of mortgage you are refinancing into must also be taken into account. There are many factors that need to be looked at to make sure refinancing is the best choice for you.
The best mortgage rates are only one factor when refinancing your home loan. Consider the type of mortgage you are refinancing into and ask yourself, and your mortgage company, why this is the best loan for your total financial situation.
If you are refinancing to consolidate other debt, especially credit card debt, be sure you compare your refinanced interest rate to the interest rate being accrued by your other consumer debt. Even a high refinanced interest rate is probably much lower than the interest rate being charged on your credit cards, auto loans, or student loans.
